How to Price Your Home Correctly

How to Price Your Home Correctly

  • Realty Austin
  • 08/29/22

When you’ve crossed the finish line and sold your home, you want to look back at the process with no regrets. To confidently step forward into the next part of your life, you need to feel like you sold your home for a fair price. So how do you know that you listed your home correctly and negotiated the best deal?

If you’re a homeowner in Austin thinking about selling your home, you should make sure you’ve got a solid game plan to get the results you want. Austin’s housing market saw incredible growth in the last few years, but demand continues to shift quickly. Selling your home isn’t as simple as putting a price on it and watching the bids roll in, and you can’t just price your home based on what homes in your area are selling for. Keep reading as we break down how to price your home and the importance of pricing correctly.

What’s my home worth?

When you start to think about selling your home, current market values can be challenging to pinpoint. Popping the question into your favorite search engine will provide you with a good starting point: home valuation tools. 

These tools, like this one offered by Realty Austin, are one way to begin to get an idea of the value of your home. They work by allowing you to enter your home address and then generating a ballpark figure based on factors like what homes have sold for in your area and the square footage of your home. It’s important to keep in mind that they don’t paint the whole picture of your home’s unique worth, and some websites could be using outdated data. 

What is a comparative market analysis?

A Comparative Market Analysis, or CMA, is one tool that real estate agents use to estimate the value of a property. This is done by pulling in data from similar homes that have sold in the same area as yours. A CMA can include descriptions of your home and a few other properties that have sold in the same area. It also includes factors that influence the price of the homes,  like age, style, bedrooms, and more. Essentially, a CMA is an informal generalization that helps you get a sense of the local market and where your house compares. 

A great CMA will have price adjustments to properties that have recently sold, so that you can easily see the differences in properties. Even in homes that have the exact square footage, you will find no two homes are alike. Each property will have unique features that need to be accounted for.

How does a home appraisal work? 

If your buyer is purchasing your home with a loan, then the lender will require an appraisal. If your home is not priced correctly, you could run into issues at the time of the appraisal and have to re-negotiate or lose the buyer. It is important to have the appropriate addendums in place to help with re-negotiations in order to help avoid losing the buyer—this is another case where having an agent in your corner is essential. 

An appraiser's sole responsibility is to determine the value of the property by doing an appraisal for the mortgage lender. Generally, the appraiser will use a sales comparison approach by comparing your home's features with other homes that have sold on the market within the last few months.

An experienced agent can be your advocate during the appraisal process. They can be there to meet with the appraiser and ensure that the appraiser doesn’t do a drive-by appraisal and that they physically go into your home. While an agent can’t conduct the appraisal or offer suggestions of value, they can provide the appraiser with insights about your home and other relevant information on properties in the area that they have gathered in reference to your home. Ultimately, the appraiser determines the value of your home. 

What are the benefits of working with a REALTOR?

By now you’ve gathered that a lot can go into pricing a home. It may be tempting to just price your home at the number a valuation tool gives you, but home values are often more nuanced. When you're selling your home, you want to work with an expert to make sure you get the best return and capitalize on your home equity.

As the market shifts from a seller’s market to a more balanced market, having an agent that understands what is happening will help protect you from having your home sit on the market and you don’t have to reduce your price. Make sure an agent is attuned to the market, so that you are pricing correctly in a shifting market. 

When pricing your home, a great agent will look at not just the square footage of your home, but they’ll also factor in:

  • Current market competition
  • History of houses sold
  • Unique features that add value like a pool, updates, and more

An experienced agent will also be able to defend their pricing process to potential buyers, which helps protect you from low offers. Realty Austin agents have detailed data and market knowledge about their specialty areas. On top of all of these benefits of working with a real estate agent, you also get the marketing power of our brokerage to get your home seen by the right buyer. 

What happens if I price my home too low?

Selling your home isn’t that different from dating—you don’t want to sell yourself short! If you price your home too low, you run the risk of potential buyers assuming something is wrong with it. You may think that pricing your home lower will cause people to bid on it, but that isn’t necessarily true. As more inventory builds in Austin, agents are seeing fewer bidding wars. You may end up getting offers below your list price, and if you accept, you could be leaving money on the table and hurting your purchasing power for your next home.

What happens if I price my home too high?

If you price your home too high, your home may sit on the market for longer. This can delay your plans and your anticipated timeline for selling your home. Another downside of pricing your home too high is that if you aren’t receiving offers, you may have to lower the price on your home. This is called a price reduction.

While there are a variety of home pricing strategies, testing a price is almost never a good plan, because buyers can read a price drop as a negative. While it is hard to say you won't have to change your price as the market shifts, your agent will evaluate changes in inventory on a weekly basis until your home goes under contract.

 

Working with an experienced agent to price your home accurately is the best way to ensure you sell your home quickly and for the best possible return. 

 

 

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